“Our battle against inflation is not over yet, there is still a long way to go,” said the German central bank president. Nagel and other ECB board members stood by their plan last week to raise interest rates by another half percentage point.
There is no doubt, according to Nagel, that price pressures are strong and widespread throughout the economy. “If we want to tame this stubborn inflation, we will have to be even more stubborn,” said the head of the Bundesbank.
The US Federal Reserve’s interest rate decision will be announced today. The central bank is expected to raise interest rates again in the fight against high inflation. However, the Fed is expected to raise interest rates a little less aggressively than previously anticipated to keep the banking sector calm.
Nagel thinks banks may be “more cautious” about lending after troubled Swiss bank Credit Suisse had to be bailed out by its competitor UBS, which caused much turmoil in financial markets. However, he added that it is too early to conclude that the region is heading for a credit crunch.